Jones v. Rutherford

• Decision Date: 16 October 1928
• Citation: 225 Ky. 773,10 S.W.2d 296
• Parties: JONES v. RUTHERFORD et al.
• Court: Kentucky Court of Appeals

10 S.W.2d 296

225 Ky. 773

JONES v. RUTHERFORD et al.

Court of Appeals of Kentucky

October 16, 1928

Appeal from Circuit Court, Knox County.

Action by E. L. Jones against W. F. Rutherford and others. From a judgment of dismissal, plaintiff appeals. Reversed and remanded.

J. J Tye, of Barbourville, for appellant.

Hiram H. Owens, of Barbourville, for appellees.

McCANDLESS J.

The city of Corbin owns and operates a water and light plant. Conceiving that the plant was inadequate for the needs of the city, the board of commissioners took steps to install an additional electrical power unit. They were unable to contract for the purchase and installation of this unit without exceeding the limit of municipal indebtedness permissible under section 157 of the Constitution. In avoidance of this barrier, the board by ordinance duly enacted called for bids to be submitted for a lease to the city of such machinery as was required for that purpose, with an option of purchase at expiration of the lease. The lowest and best bidder on this proposition was the Skinner Engine Company, of Erie, Pa. The bid, plans, and specifications offered by that company were duly approved by the board, and the city authorized to make the contract of leasing with the company for the installation of the machinery therein specified in an appropriate ordinance. The agreement and contract to be executed were set out in the ordinance, and were quite elaborate; the parts pertinent to a discussion of the case being:

"Sec B. That, in consideration of and subject to the performance by the city of the covenants and agreement herein contained the company does hereby let, lease, and rent to the city the machinery and materials specified in the company's detailed specifications to the city, dated September 4, 1928 which specifications are attached hereto, and made a part of this lease.

Sec. C. That this lease is to be for a period of twenty-five (25) calendar months, commencing on the date that the company delivers the above-mentioned machinery and materials to the city at Erie, Pa., and extending twenty-five calendar months thereafter.

Sec. D. That the rental for the first calender month of this lease shall be seven thousand, four hundred and forty-six ($7,446.00) dollars, payable in advance in cash, which rental shall be evidenced by a warrant of the city, due and payable when this installment of rent becomes due, and delivered in advance.

Sec. E. That the rental for the second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth, sixteenth, seventeenth, eighteenth, nineteenth, twentieth, twenty-first, twenty-second, twenty-third, twenty-fourth, and twenty-fifth months, shall be one thousand and sixty-two and 50/100 ($1,062.50) each, payable monthly in advance in cash, which installments of rental shall be evidenced by warrants of the city, due and payable as each installment of rent becomes due and all twenty-five delivered in advance.

That, upon condition when it seeks to exercise such option the city shall have fully paid to the company all moneys then due and payable by it hereunder to the company, the city shall have, and is hereby given, the option to purchase said leased equipment at the end of said leased term, at the agreed price of one ($1.00) dollar, to be paid in cash. Upon the exercise by the city of the above-mentioned option in the manner heretofore provided to be exercised, the company will execute and deliver to the city a bill of sale and title to the above-described equipment.

Sec. L. That any failure by the city to pay the company any installment of rent hereunder for thirty (30) days after the same shall have become due and payable, or any failure by the city to fully keep and perform any of its other obligations as lessee, shall constitute a default and ground for forfeiture of this lease, if the lessor...